If you find that an Estate you are dealing with has or may become insolvent then it is important you take a step back and reconsider the way forward because it is vital that the correct insolvency procedures are followed. Otherwise, the executors and professionals instructed may subsequently be forced to repay all previous estate payments, including professional fees. This in turn may give rise to a right of action against those professionals who advised on the administration of the estate.
If the parties involved suspect that the estate may be insolvent, there is the option of following an alternative statutory procedure that allows an Insolvency Administration Order (“IAO”) to be obtained. An IAO is effectively a bankruptcy order that is obtained over an insolvent deceased estate. It allows an insolvency practitioner to take over the role previously carried out by the executor(s) so that any available assets can be realised and paid to legitimate creditors. Obtaining an IAO is often the best way forward as it gives creditors the comfort of knowing that an independent insolvency practitioner will deal with the estate. For beneficiary/executor clients, it can remove the burden of having to deal with an estate from which they may ultimately receive no benefit.
This is a unusual area of insolvency, and we have considerable experience in finding the best way forward. Please give us a call if you want to discuss the options available – the initial meeting or chat is always free.
Following the death of Mr X in a tragic house fire, it was found by the Executor, that there was no insurance cover with considerable costs having arisen. An Insolvency Administration Order was made to have Trustees appointed to take on the legal and technical complexities and to mange the affairs to ensure costs were managed and a payment to creditors made.
Detailed below are links to the two leading cases which were both dealt with by the highly experience team in the Northwest
Sarah Marsden or Simon Boulton on 01772 202000
Sheraz Ahmed on 0161 827 1700